Credit Crunch Hits Aig’s United Deal

There are fears that US insurance company AIG could be the next victim of the credit crunch threatening the firm’s £56.5m sponsorship deal with Manchester United.

Following the collapse of banking giant Lehman Brothers yesterday, speculation is rife that AIG could be close to bankruptcy as well.

The firm will be allowed to use $20bn of assets held by its subsidiaries to provide cash needed to stay in business but it is unclear how long this situation will be tenable.

According to reports, AIG executives met top New York state officials and banking regulators over the weekend seeking permission to liquidate assets to raise cash. AIG is also reported to have approached the US Federal Reserve seeking over £22bn in short-term financing.

The insurer has incurred £10bn in losses over the past three quarters from guarantees it wrote on mortgage derivatives.

Should the insurance giant go under, its four-year sponsorship deal with United, signed in 2006, would be immediately terminated.

United is believed to be monitoring the situation closely although has refused to comment on speculation.

Should the sponsorship come under threat it would be the latest in a line of such deals with Premier League clubs to run into trouble.

Only last week, travel operator XL Leisure went into administration ending its lucrative shirt sponsorship deal with West Ham.